Government Subsidies and Household Debt Burden After the Great Recession

Kyoung Tae Kim and Melissa J. Wilmarth ()
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Kyoung Tae Kim: University of Alabama
Melissa J. Wilmarth: University of Alabama

Journal of Family and Economic Issues, 2016, vol. 37, issue 3, No 3, 349-358

Abstract: Abstract During the recent Great Recession, US households, especially those with low incomes, faced severe financial distress. Households experiencing economic hardship may turn to receiving government assistance to alleviate the hardship or distress. Receiving government assistance may improve a household’s financial situation as it could be decreasing its reliance on debt or even improving a household’s ability to repay their current debt. We investigated how households’ financial debt obligations were affected by receiving government assistance, as has not been previously analyzed. Given the focus of this research, we included households under 185 % of poverty threshold released by the 2012 US Census Bureau. Results from the 2010 and 2013 Survey of Consumer Finances indicate that government assistance was positively related to the odds of meeting debt-to-income ratio guidelines, implying that government assistance plays an important role in financial security of low-income households. This study provides important insights for researchers and policymakers in the areas of poverty and household finance.

Keywords: Poverty; Government subsidies; Household debt; Survey of consumer finances (search for similar items in EconPapers)
JEL-codes: D12 D14 I32 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s10834-016-9492-5

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